Exhibit 99.1
Investor Contact: Media Contact:
Meredith Mendola Nicole Rowe
781-370-6151 781-370-6369
mmendola@ptc.com nrowe@ptc.com
PTC Reports Fourth Quarter and Fiscal Year 2006 Results
- Company Delivers Full-Year Revenue Growth of 19%, License Revenue Growth
of 26% and Non-GAAP Operating Income Growth of 29% -
NEEDHAM, Mass., November 1, 2006 - PTC (Nasdaq: PMTC), the Product Development
Company(R), today reported revenue of $245.5 million for the fourth quarter
ended September 30, 2006, up 26% from the same period last year. For fiscal year
2006, PTC reported total revenue of $854.9 million, up 19% from fiscal year
2005. Total license revenue for the fourth quarter of 2006 was $84.6 million,
up 39% from the same period last year. Total license revenue for fiscal year
2006 was $263.5 million, up 26% from fiscal year 2005. The results for the
fourth quarter of 2006 reflected continued acceleration in organic revenue
growth and the contribution of recently acquired Mathsoft.
"Fiscal 2006 was an exceptional year marked by customer success and strong
financial results," said C. Richard Harrison, president and chief executive
officer. "In particular, we delivered robust Desktop Solutions results, record
Enterprise Solutions revenue, and significant operating leverage. Our
performance is attributable to three key differentiators: our expanding solution
capability footprint, which includes Arbortext(R), Mathcad (R) and,for fiscal
2007, ITEDO (R) solutions, our single platform architecture, and a thorough
understanding of our customers' product development challenges."
GAAP operating income for the fourth quarter of 2006 was $34.2 million, compared
with $11.6 million in the year-ago period. GAAP net income for the fourth
quarter of 2006 was $28.1 million, or $0.24 per diluted share, compared with
GAAP net income of $17.3 million, or $0.15 per diluted share, in the year-ago
period. Our GAAP results for the fourth quarter and full fiscal year of 2006
include a $2.3 million charge for stock-based compensation expense resulting
from our review of historic stock option grants, which is now complete. Non-GAAP
operating income, which excludes stock-based compensation cost, amortization of
acquisition-related intangible assets, in-process research and development
write-offs associated with acquisitions, and restructuring charges, was $48.6
million, or 19.8% of total revenue for the fourth quarter of 2006, compared with
$27.8 million, or 14.2% of total revenue in the year-ago period. Non-GAAP net
income, which excludes the items excluded from non-GAAP operating income and the
related tax effect of these items, as well as one-time tax items, was $42.6
million for the fourth quarter of 2006, or $0.37 per diluted share, compared to
$24.6 million in the year-ago period, or $0.22 per diluted share.
GAAP operating income for fiscal year 2006 was $74.1 million compared with $85.8
million in fiscal year 2005. GAAP net income for fiscal year 2006 was $63.2
million, or $0.56 per diluted share, compared to $83.6 million, or $0.75 per
diluted share in fiscal year 2005. PTC adopted SFAS 123(R) in the fourth quarter
of fiscal year 2005 and, therefore, the full year GAAP results for the year-ago
period do not include the cost of stock-based compensation for the first nine
months of 2005 in accordance with SFAS 123(R). Non-GAAP operating income, which
excludes stock-based compensation cost, amortization of acquisition-related
intangible assets, in-process research and development write-offs associated
with acquisitions, and restructuring charges, was $132.8 million in 2006, or
15.5% of total revenue, compared with $103.0 million, or 14.3% of total revenue
in 2005. Non-GAAP net income, which excludes the items excluded from non-GAAP
operating income and the related tax effect of these items, as well as one-time
tax items, was $113.4 million for 2006, or $1.00 per diluted share, compared to
$87.4 million in the year-ago period, or $0.78 per diluted share. We have
provided a reconciliation between GAAP and non-GAAP results in the attached
financial tables.
Cash and cash equivalents were $183 million at the end of the fiscal year 2006,
up from $174 million at the end of the third quarter.
Fourth Quarter 2006 Revenue Metrics
PTC delivered the following results for the fourth quarter of fiscal 2006
compared to the same period last year:
o Total revenue growth of 26%, driven by license revenue growth of 39%,
training and consulting service revenue growth of 34%, and maintenance
revenue growth of 12%. Fourth quarter revenue included two transactions in
excess of $5 million each;
o Desktop Solutions total revenue growth of 23% to $159.4 million, driven by
license revenue growth of 38%, training and consulting service revenue
growth of 33%, and maintenance revenue growth of 12%. License revenue growth
reflects strong sales of Pro/ENGINEER (R) new seats, modules, and upgrades,
in addition to the revenue attributable to recently acquired Mathsoft
products;
o Enterprise Solutions total revenue growth of 31% to a record $86.1 million,
driven by license revenue growth of 40%, training and consulting service
revenue growth of 34%, and maintenance revenue growth of 13%. License
revenue reflects strong sales of multiple Windchill (R) solutions including
Windchill PDMLink (R) and related modules, Windchill ProjectLink (TM), and
our visualization software;
o Total revenue from our reseller channel of $46.8 million, up 34%, reflecting
success in the SMB market around the world;
o Revenue growth across all major geographies: 38% growth in North America,
21% growth in Europe, and 12% growth in Asia-Pacific. Asia-Pacific revenue
growth reflects an 18% revenue decline in Japan, more than offset by a 53%
increase in revenue in the Pacific Rim.
In the fourth quarter, PTC received orders from leading organizations, including
Alstom Power Hydro, ANDREAS STIHL AG & Co. KG, Dell Inc., Daihatsu Motor Co.,
LTD., Federal Mogul Corporation, Festo AG & Co. KG, Herman Miller, Inc.,
Ingersoll Rand, Kye Systems Corp., OKI Electric Industry Co., Ltd., Qingdao
Beihai Ship Building Heavy Ind. Co. Ltd., and Tontec International.
Fiscal Year 2006 Revenue Metrics
PTC delivered the following results for fiscal 2006 compared to fiscal 2005:
o Total revenue growth of 19%, driven by license revenue growth of 26%,
training and consulting service revenue growth of 31%, and maintenance
revenue growth of 8%;
o Desktop Solutions total revenue growth of 12%, driven by license revenue
growth of 20%, training and consulting service revenue growth of 17%, and
maintenance revenue growth of 6%;
o Enterprise Solutions total revenue growth of 35%, driven by license revenue
growth of 36%, training and consulting service revenue growth of 43%, and
maintenance revenue growth of 21%;
o Total revenue from our reseller channel of $171.5 million, up 24%;
o Revenue growth across all major geographies: 33% growth in North America,
13% growth in Europe, and 6% growth in Asia-Pacific. Asia-Pacific revenue
growth reflects a 14% revenue decline in Japan for fiscal year 2006, offset
by a 34% increase in revenue in the Pacific Rim.
"We plan to drive continued revenue and earnings growth throughout 2007," said
Harrison. "Our market continues to grow, and our own growth exceeds that of the
market. We will continue to execute our strategy to help our customers solve
their product development challenges, while at the same time making continued
improvements to our worldwide distribution and service business models."
First Quarter and Fiscal Year 2007 Financial Outlook
PTC recently announced the acquisition of ITEDO Software, a provider of leading
technical illustration software. ITEDO's revenue for the past year was
approximately $5 million. PTC expects the acquisition to be slightly dilutive to
GAAP net income for fiscal 2007 due to the incremental amortization expense.
However, PTC expects the acquisition to have a neutral effect on non-GAAP net
income. Reflecting this acquisition, PTC has updated its targets for fiscal
2007.
PTC's revenue forecast for the first quarter of fiscal 2007 is between $215
million and $220 million. On a GAAP basis, first quarter total costs and
expenses are expected to be between $200 million and $203 million, and earnings
per share are expected to be between $0.09 and $0.11. Total non-GAAP first
quarter operating costs and expenses are expected to be between $187 million and
$190 million. The Company expects non-GAAP first quarter earnings per share to
be between $0.19 and $0.21. These non-GAAP operating cost and earnings
expectations exclude the following first quarter estimated expenses and their
tax effects:
o Approximately $10 million of expense related to stock-based compensation
o Approximately $3 million of acquisition-related amortization expense
For the fiscal year ending September 30, 2007, PTC expects revenue to be about
$945 million. On a GAAP basis, fiscal year 2007 total costs and expenses are
expected to be approximately $834 million, and earnings per share are expected
to be between $0.70 and $0.75. Total non-GAAP operating costs and expenses are
expected to be approximately $780 million. The Company expects non-GAAP earnings
per share to be between $1.15 and $1.20 for the fiscal year. These non-GAAP
earnings expectations exclude the following full-year estimated items and their
tax effects:
o Approximately $40 million of expense related to stock-based compensation
o Approximately $14 million of acquisition-related amortization expense
Important Information about Non-GAAP References
References by PTC to non-GAAP operating costs and non-GAAP earnings per share
refer to costs and expenses or earnings per share excluding stock-based
compensation cost, amortization of acquisition-related intangible assets,
in-process research and development write-offs associated with acquisitions,
restructuring charges, and their related tax effects, as well one-time tax
items, if any. GAAP requires that these costs and charges be included in costs
and expenses and accordingly used to determine operating income (loss) and
earnings per share. PTC's management uses non-GAAP operating costs, and
associated non-GAAP net income (which is the basis for non-GAAP earnings per
share) to make operational and investment decisions, and PTC believes that they
are among several useful measures for an enhanced understanding of our operating
results for a number of reasons.
First, excluding the stock-based compensation cost from GAAP operating income
enables management and investors to perform a meaningful comparison of
PTC's operating results to prior periods. In periods prior to the fourth quarter
of fiscal 2005, PTC's GAAP financial results reflected minimal stock-based
compensation expense because the value of stock-based awards was determined
using a method other than as prescribed in SFAS 123(R); whereas, upon adoption
of SFAS 123(R), stock-based compensation expense is now determined using a fair
value method and such expenses are now distributed among the functional expense
line items in the GAAP presentation. Second, although PTC undertakes analyses to
ensure that its stock-based compensation grants are in line with peer companies
and do not unduly dilute shareholders, PTC allocates these grants and measures
them at the corporate level. Management excludes their financial statement
effect when planning or measuring the periodic financial performance of PTC's
functional organizations since they are episodic in nature and unrelated to our
core operating metrics. Likewise, we believe that excluding items such as
in-process research and development write-offs and amortization of intangible
assets associated with acquisitions, or restructuring charges that are not
directly attributable to our ongoing operations and that do not generally
fluctuate in correlation with periodic performance, provides investors with
information that helps to compare period-over-period operating performance by
highlighting the effect of acquisitions or restructuring activities on our
results of operations. In addition, PTC's management excludes the financial
statement effect of these items in creating operating budgets for PTC's
functional business units and in evaluating and compensating employees due to
the fact that it is difficult to forecast these expenses. Lastly, we believe
that providing non-GAAP earnings per share affords investors a view of earnings
that may be more easily compared to peer companies and enables investors to
consider PTC's earnings on both a GAAP and non-GAAP basis in periods when PTC is
engaged in acquisition activities or undertaking non-recurring activities.
PTC believes these non-GAAP measures will aid investors' overall understanding
of PTC's results by providing a higher degree of transparency for certain
expenses, and providing a level of disclosure that will help investors
understand how PTC plans and measures its own business. However, non-GAAP net
income (loss) should be construed neither as an alternative to GAAP net income
(loss) or earnings (loss) per share as an indicator of our operating performance
nor as a substitute for cash flow from operations as a measure of liquidity
because the items excluded from the non-GAAP measures often have a material
impact on PTC's results of operations. Therefore, management uses, and investors
should use, non-GAAP measures in conjunction with our reported GAAP results.
Earnings Call Webcast
PTC will provide detailed financial information and an outlook update on its
fourth quarter and fiscal year 2006 results conference call and live webcast
on November 1, 2006 at 10 a.m.ET. This earnings press release and accompanying
financial and operating statistics will be accessible prior to the conference
call and webcast on PTC's web site at www.ptc.com/for/investors.htm. In
addition, the live webcast may be accessed at the same Web address. To access
the live call, please dial 888-566-8560 (in the U.S.) or +1-517-623-4768
(international). Please use passcode PTC. A replay of the call will be available
until 5:00 p.m. ET on November 6, 2006. To access the replay via webcast, please
visit www.ptc.com/for/investors.htm. To access the replay by phone, please dial
203-369-3183.
PTC's unaudited consolidated statements of operations, the unaudited condensed
consolidated balance sheets, and the unaudited condensed consolidated
statements of cash flows for the fourth quarter and fiscal year 2006 are
attached.
About PTC
PTC (Nasdaq: PMTC) provides leading product lifecycle management (PLM), content
management and dynamic publishing solutions to more than 40,000 companies
worldwide. PTC customers include the world's most innovative companies in
manufacturing, publishing, services, government and life sciences industries.
PTC is included in the S&P 500 and Russell 2000 indices. For more information on
PTC, please visit http://www.ptc.com.
Statements in this news release that are not historical facts, including
statements about our confidence and strategies and our expectations about
revenue, results of operations, market growth and market acceptance of our
products, are forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from those projected. Those
risks and uncertainties include the following: we may be unable to achieve
revenue and earnings growth at recent rates; the market for our products and
market adoption of our products may not continue to grow at recent rates; our
recent acquisitions may not generate the revenue we expect; as well as other
risks and uncertainties detailed from time to time in reports we file with the
Securities and Exchange Commission, including our most recent reports on Forms
10-K and 10-Q.
PTC, The Product Development Company, Windchill, Arbortext, Mathsoft, ITEDO, and
all PTC product names and logos are trademarks or registered trademarks of
Parametric Technology Corporation or its subsidiaries in the United States and
in other countries. All other companies and products referenced herein have
trademarks or registered trademarks of their respective holders.
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Year Ended
-------------------------- --------------------------
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenue:
License $ 84,608 $ 60,862 $ 263,460 $ 209,717
Service 160,894 134,230 591,458 511,002
--------- --------- --------- ---------
Total revenue 245,502 195,092 854,918 720,719
--------- --------- --------- ---------
Costs and expenses:
Cost of license revenue(2) 4,031 3,499 12,218 8,444
Cost of service revenue(2) 69,473 55,387 257,415 199,798
Sales and marketing(2) 76,349 69,106 274,287 243,758
Research and development(2) 39,861 35,392 147,338 118,267
General and administrative(2)19,778 19,749 75,484 63,605
Amortization of acquired
intangible assets 1,782 968 6,074 1,638
In-process research and
development - 730 2,100 730
Restructuring charge, net - (1,307) 5,947 (1,307)
--------- --------- --------- ---------
Total costs and expenses 211,274 183,524 780,863 634,933
--------- --------- --------- ---------
Operating income 34,228 11,568 74,055 85,786
Other income, net 956 1,300 3,699 5,526
--------- --------- --------- ---------
Income before income taxes 35,184 12,868 77,754 91,312
Provision for (benefit from)
income taxes 7,132 (4,407) 14,559 7,720
--------- --------- --------- ---------
Net income $ 28,052 $ 17,275 $ 63,195 $ 83,592
========= ========= ========= =========
Earnings per share:(1)
Basic $ 0.25 $ 0.16 $ 0.58 $ 0.77
Weighted average shares
outstanding 110,224 108,928 109,849 108,536
Diluted $ 0.24 $ 0.15 $ 0.56 $ 0.75
Weighted average shares
outstanding 114,581 112,267 113,382 111,981
(1) A two-for-five reverse stock split of our common stock became effective on
February 28, 2006. All earnings per share and weighted-average share amounts
are presented on a post-split basis.
(2) Effective July 3, 2005, PTC adopted SFAS 123(R), "Share-Based Payment".
Accordingly, for three months and fiscal year ended September 30, 2006, and
three months ended September 30, 2005, stock-based compensation was
accounted under SFAS 123(R) while, for the three and nine months ended July
2, 2005, stock-based compensation was accounted under APB No. 25,
"Accounting for Stock Issued to Employees". Our results for the fourth
quarter and full fiscal year of 2006 include a $2.3 million charge for
stock-based compensation expense resulting from our review of historic stock
option grants, which is now complete. The amounts in the tables above
include stock-based compensation as follows:
Three Months Ended Year Ended
-------------------------- --------------------------
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Cost of license revenue $ 26 $ 61 $ 122 $ 61
Cost of service revenue 1,881 2,644 7,711 2,644
Sales and marketing 3,833 5,113 11,074 5,113
Research and development 2,364 3,468 9,017 3,722
General and administrative 3,110 3,925 12,563 3,925
------------ ------------ ------------ ------------
Total stock-based
compensation $ 11,214 $ 15,211 $ 40,487 $ 15,465
============ ============ ============ ============
PARAMETRIC TECHNOLOGY CORPORATION
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Year Ended
-------------------------- --------------------------
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
GAAP operating income $ 34,228 $ 11,568 $ 74,055 $ 85,786
Stock-based compensation 11,214 15,211 40,487 15,465
Amortization of acquired
intangible assets included
in cost of license revenue 1,296 619 3,945 646
Amortization of acquired
intangible assets included
in cost of service revenue 66 - 235 -
Amortization of acquired
intangible assets 1,782 968 6,074 1,638
In-process research and
development - 730 2,100 730
Restructuring charge, net - (1,307) 5,947 (1,307)
------------ ------------ ------------ -------------
Non-GAAP operating
income $ 48,586 $ 27,789 $132,843 $ 102,958
============ ============ ============ ==============
GAAP net income $ 28,052 $ 17,275 $ 63,195 $ 83,592
Stock-based compensation 11,214 15,211 40,487 15,465
Amortization of acquired
intangible assets included
in cost of license revenue 1,296 619 3,945 646
Amortization of acquired
intangible assets included
in cost of service revenue 66 - 235 -
Amortization of acquired
intangible assets 1,782 968 6,074 1,638
In-process research and
development - 730 2,100 730
Restructuring charge, net - (1,307) 5,947 (1,307)
Income tax adjustments(3) 156 (8,928) (8,588) (13,344)
--------------------------- ---------------------------
Non-GAAP net income $ 42,566 $ 24,568 $113,395 $ 87,420
=========================== ===========================
GAAP diluted earnings
per share $ 0.24 $ 0.15 $ 0.56 $ 0.75
Stock-based compensation 0.10 0.13 0.36 0.14
All other items identified
above 0.03 (0.06) 0.08 (0.11)
------------ ------------ ------------ -------------
Non-GAAP diluted
earnings per share $ 0.37 $ 0.22 $ 1.00 $ 0.78
========================== ===========================
Weighted average shares
used in calculating
Non-GAAP diluted net
earnings per share (4) 114,581 113,342 113,382 112,250
(3) Reflects the tax effect of non-GAAP adjustments above, as well as the
effect of one-time tax benefits due to the favorable resolution of tax
audits in the amount of $6.1 million in the third quarter of 2006 and $7.7
million and $12.1 million in the fourth quarter and full year of 2005,
respectively.
(4) Weighted average shares used in calculating non-GAAP diluted earnings per
share for the fourth quarter and fiscal year 2005 includes 1.1 million and
0.3 million additional shares related to outstanding stock options assumed
to be repurchased under SFAS 123(R) that would not be assumed to be
repurchased under APB No. 25.
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, September 30,
2006 2005
-----------------------------------------
ASSETS
Cash and cash equivalents $ 183,448 $ 204,423
Accounts receivable, net 181,008 147,497
Property and equipment, net 51,603 52,551
Goodwill and acquired intangibles, net 327,122 258,838
Other assets 152,263 123,314
------------------------------------------
Total assets $ 895,444 $ 786,623
==========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenue $ 210,997 $ 200,467
Other liabilities 244,019 262,312
Stockholders' equity 440,428 323,844
------------------------------------------
Total liabilities and stockholders'
equity $ 895,444 $ 786,623
==========================================
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Year Ended
--------------------------------------------------------
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
--------------------------------------------------------
Cash flows from operating
activities:
Net income $ 28,052 $ 17,275 $ 63,195 $ 83,592
Stock-based
compensation 11,214 15,211 40,487 15,465
Depreciation and
amortization 9,078 7,570 33,887 25,881
In-process research
and development - 730 2,100 730
Other (36,541) (32,092) (74,505) 2,471
--------------------------------------------------------
Net cash provided by
operating activities(5) 11,803 8,694 65,164 128,139
Capital expenditures (6,407) (3,401) (19,472) (16,135)
Acquisitions of businesses - (192,087) (75,084) (198,897)
Other investing and
financing activities 3,712 (10,493) 6,544 (2,018)
Foreign exchange impact
on cash 447 (1,298) 1,873 (1,553)
--------------------------------------------------------
Net change in cash and
cash equivalents 9,555 (198,585) (20,975) (90,464)
Cash and cash equivalents,
beginning of period 173,893 403,008 204,423 294,887
--------------------------------------------------------
Cash and cash equivalents,
end of period $ 183,448 $ 204,423 $ 183,448 $ 204,423
========================================================
(5) Net cash provided by operating activities for the year ended September 30,
2006 includes a tax payment of $9.5 million in relation to the settlement
of IRS tax audits. For the year ended September 30, 2005, net cash provided
by operating activities includes a tax refund received during the first
quarter of 2005 of $39.5 million. This refund was included in income taxes
receivable on the Consolidated Balance Sheet at September 30, 2004.